If a recent polling of 163 insurance representatives by Exigen Insurance Solutions has any merit you should expect 2009 to bring with it pay-only-as-you-drive (PAYD) insurance products. Interest in pay-only-as-you-drive (PAYD) insurance has risen sharply in the past year, fueled by a variety of concerns.

Consumers see it as a means of reducing their insurance premiums. Public policy advocates also like it, seeing it as a mechanism to incentivize less driving which in turn would result in fewer accidents, less pollution, lighter dependence on oil, and less wear and tear on public infrastructure - a win-win-win for consumers, insurers, and our planet.

Most US insurers are acting cautiously in their haste to bring pay-only-as-you-drive products to the market, but a handful are acting zealously. Cautious insurers are most concerned by the fact that if they don't have pay-only-as-you-drive products in place when other companies introduce them they'll risk losing large numbers of their policyholders. Insurers also have concern for the cost of implementation, consumer privacy concerns, concerns for the cost of telemetry devices needed to monitor drivers, state regulatory concerns and concerns regarding patent infringement.

Despite insurer's concerns, it is reported that as many as fourteen US insurance companies are prepared to throw caution to the wind to launch pay-only-as-you-drive products in 2009. I expect many more will jump on the bandwagon quickly thereafter.

Is Pay-Only-As-You-Drive Auto Insurance Good for Consumers?

Consumers should be most concerned about giving up their right to privacy when the event data recorder (commonly known as a "black box") their vehicles are carrying sends information on their driving habits back to the insurer who determines the amount they'll pay. Stab the brake hard one too many times, accelerate aggressively or maneuver sharply and you may get a surcharge or a cancellation notice. Still, it's a risk some low-mileage drivers are willing to take for the possibility of saving money.

In a recent pilot program, 5,000 Minnesota residents insured with Progressive had the option to save up to 25 percent on their premium for allowing the insurer to monitor their driving habits. TripSensors installed in their cars recorded not only mileage, but the exact time of engine start up and shut down, and the speed at which customers drove. The biggest chuck of savings (15%) was available for customers who stayed close to home by driving fewer miles and who drove at favorable times of day avoiding traffic and congestion.

Progressive reported success of an earlier pilot of 250 Minnesota customers under similar conditions where they received a monitoring chip and a $25 incentive to try PAYD for 30 days. The consumers then filled out a questionnaire about the program.

William Perry, spokesperson for Mayfield, Ohio-based Progressive was quoted for an article in the Insurance Journal saying,

"The response from that test was very positive. People really liked being able to have some more control over the cost of their auto insurance and they liked the information aspect of it, learning about their driving habits and seeing the statistics about their driving."

Not everyone agrees including one anonymous Progressive agent who spoke to Insurance Journal saying he had deep concerns about the concept of monitoring driver habits.

"I personally do not think this is a good idea. I think...you are invading the privacy of people. Every once in awhile I speed or I probably do things that I shouldn't and I think they're trying to break down driving too specifically. How are they going to charge these things if you do speed or if you drive more miles to work or if you drive late at night?"

Most would agree these are indeed good questions. And, if a Progressive agent is concerned about what his company is considering, shouldn't you be concerned? More importantly one might ask, What's coming next?

content & design 2002-2008 David Williams and SafeCollisionRepairs.com

About Safe Collision Repairs

For more than ten years, David Williams of Wheelersburg, Ohio's Safe Collision Repairs has worked with consumers and attorneys in the tri-states of Ohio, Kentucky and West Virginia to expose unsafe auto repairs and maximize recovery on auto insurance claims. Some of the company's services include Post-Repair Inspections, Prepurchase Inspections, Auto Damage Assessments, Lemon Law Investigations, Expert Court Testimony and Diminished Value Calculations using an advanced version of Network Information Communication's WreckCheck program.

Inquiries can be directed to: Safe Collision Repairs David A. Williams Post Office Box 70 Wheelersburg, Ohio 45694 (740) 456-1111 (740) 355-4056

Disclaimer

The content expressed on this website and in the article above represents the opinions of David A. Williams. Williams is neither an attorney nor public insurance adjuster, but is an expert, consultant, and writer specializing in the field of automotive collision repair and valuations. The information provided herein is not intended to be a substitute for legal or insurance advice. Because collision repair is a continually evolving science, any text, materials or links found herein are provided without claim or guarantee to their accuracy or completeness.